Reliance plans London listing post-MTN merger

10 Jun 2008

According to the Indian press, Anil Ambani, head of Reliance Communications, is planning a secondary listing in London for a new global telecoms giant after the planned merger with MTN of South Africa. Reliance, India’s second-biggest mobile operator, is in talks with MTN on a deal to create one of the world’s largest telecoms companies, worth an estimated USD70 billion and with 116 million subscribers worldwide. The talks began on 26 May after Bharti Airtel dropped out of negotiations with MTN. Sources close to the Reliance-MTN deal said that the negotiations, which started in secret several months ago, were going well and were likely to be concluded before the end of a 45-day exclusivity period. The combined firm is expected to retain its listings in Johannesburg through MTN and in Bombay through Reliance, but would seek a secondary listing in London later in the year, the sources said.

The Reliance-MTN deal is complicated by restrictions on foreign ownership in India and South Africa and political sensitivities in each country about which company would be dominant. Under South African rules, buying 35% of a company obliges the purchaser to make an open offer for the rest. India limits foreign ownership in the telecoms sector to 74% and a purchase of 15% of a company triggers a mandatory open offer for another 20%. Mr Ambani owns 66% of Reliance Communications, valued at about USD20 billion, and intends to exchange this under a mechanism, yet to be agreed, for a 34.9% stake in MTN.

India, MTN Group, Reliance Communications (RCOM)